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Globalization of the Economy

Globalization of the Economy - Globalization of the Economy...

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Globalization of the Economy Jeffrey Frankel (pages 303-318) (303-304) - 2 major drives to economic globalization: 1) Reduced costs to private sector communication & transportation 2) Reduced policy barriers to public sector trade & investment - Common assumptions that are NOT TRUE: o It’s so new that the past is irrelevant o It’s irreversible o It makes national monetary authorities powerless o Development abroad determines quality of life MORE than domestic actions - 2 ways of measuring economic integration Two Benchmarks for Measuring Economic Integration (304-306) 1) Judging Globalization 2000 by 1900 Standard - 1900: revolutionary transportation & communication development - Growing trade = differences in international commodity prices narrowing - BUT: after WWI, isolationist sentiments, monetary instability, economic depression, tariff increases, other trade barriers - After WWII = restart - Assumption: technology is irreversible, therefore so is globalization - Wrong. Why? Because political forces are stronger (example = 1914-44 world fragmentation) - Lesson: World leaders must make choices like the ones after WWII instead of those after WWI 2) Judging by Globalization 2000 of Perfect International Integration - Yes, there are declining transportation costs, tariffs & trade barriers, BUT: not complete yet - <Complicated calculation of US spending & import-GDP ratios> -
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